Dynamic energy-demand models. A comparison

This paper compares two second-generation dynamic energy demand models, a translog (TL) and a general Leontief (GL), in the study of price elasticities and factor substitutions of nine Swedish manufacturing industries: food, textiles, wood, paper, printing, chemicals, non-metallic minerals, base metals and machinery. Several model specifications are tested with likelihood ratio test. There is a disagreement on short-run adjustments; the TL model accepts putty-putty production technology of immediate adjustments, implying equal short- and long-run price elasticities of factors, while the GL model rejects immediate adjustments, giving out short-run elasticities quite different from the long-run. The two models also disagree in substitutability in many cases. 21 refs